(NEW YORK TIMES) — Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 [the “Long Depression” — PID] and the years of mass unemployment that followed the financial crisis of 1929-31.
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And then Mr. Krugman, a Keynesian to the bitter end, proceeds to blame the coming Third Depression on insufficient government spending. In other words, Krugman believes the trillion dollars in US government stimulus spending since 2008 hasn’t worked only because it wasn’t enough. — PID